U.S. construction spending in March barely increased over the previous month's level as private sector projects slightly offset less government spending on infrastructure projects, the U.S. Commerce Department said Tuesday.
Construction last month rose a meager 0.1 percent over February's level, far less than the 0.4 percent uptick analysts polled by FactSet expected. Compared to construction spending of $824.7 billion in December 2011, construction spending last month was down 2 percent.
Tight credit, pro-austerity public pressure to curb public works projects and slumping home sales hampered investment in construction projects last month.
March construction spending hit a seasonally adjusted annual rate of $808.1 billion, which is 6 percent higher than March of last year when spending fell to a 12-year-low.
The primary cause of the near-flat rate of growth was a contraction in public works construction projects, which shrank by 3.2 percent compared to March 2011, led by a decline in transportation-related construction. Private construction, such as houses and office space, grew by 11.5 percent compared to the same month last year.
Private, residential and non-private residential construction each grew by 0.7 percent in March from the previous month. However, housing starts are still slumping five years after the housing bubble burst. New home sales -- an important element of economic recovery due to the ancillary effects on jobs and spending on household items -- fell by 7.1 percent in March to a 12-month low.